The key to reducing inequality? Stronger trade unions

The widening gap between rich and poor reflects a decline in trade union power, so argue the authors of the bestselling book The Spirit Level.

The widening gap between rich and poor reflects a decline in trade union power, so argue the authors of the bestselling book The Spirit Level

Inequality is rapidly rising up the political agenda right across the West. Thanks to Thomas Picketty, but no doubt also to a long recession which has seen a sharp fall in living standards, people are again feeling anxious that the proceeds of economic growth are not being shared equally.

Indeed, according to a YouGov poll from April most people now show a preference for greater equality over greater national wealth. 56 per cent of people would like to see a more equal sharing of income, even if it reduces the total amount of wealth. Meanwhile just 17 per cent would opt for greater overall wealth if it resulted in greater inequality.

As Ed Miliband has noticed, economic growth is one thing, but it must be growth for all, not just for a small subsection of people at the top.

People right across the political spectrum are also seemingly coming to realise that gross inequality can have deleterious consequences. Even George Osborne couldn’t resist boasting in the Commons earlier this year that inequality had been reduced under the Tories (he didn’t quite tell the whole story).

The bigger question is always how to deal with it: the Tories tend to rely on the apparently magical benefits of growth to fix the problem, while Labour prefers to tweak the tax and benefits systems.

A problem with Labour’s traditional approach, however, has been the ease with which new governments have been able to reverse any modest gains. We see this today with the coalition’s assault on measures like tax credits, introduced by the previous government but cut by the Tory-led coalition. The poorest in Britain saw their lot gradually improve under the Tony Blair and Gordon Brown, and yet today Britain’s poorest are worse off than their counterparts in Germany, France, Belgium, Austria, Denmark, Sweden and Finland.

One of the keys to tackling inequality, then, will be addressing the gap between rich and poor before it arises. ‘Predistribution’, was what Ed Miliband called it; or in plain English, focusing on things like proper wages ahead of paying out benefits.

But another facet of predistribution must be the trade unions, as is highlighted in a new paper for the Class think tank by Richard Wilkinson and Kate Pickett, authors of the bestselling book The Spirit Level.

The authors begin by pointing out that there has been a trend towards increasing inequality in the West since the late 1970s:

“From the 1970s to the early 1980s, the CEOs of the largest 350 US companies were paid 20 or 30 times as much as the average production worker. By the first decade of the 21st Century they were getting between 200 and 400 times as much.”

(Click to zoom)

Inequality classj

Importantly, they conclude that the widening gap “seems…to reflect a lack of any effective democratic constraint on top incomes”.

Later on in the paper the authors are a little clearer as to what this ‘democratic constraint’ might be:

“This pattern reflects the strengthening and then weakening of the labour movement during the 20th Century…As trade union membership declined, inequality increased.”

Helpfully they include some Spirit Level-style graphs to make things a little clearer (click to zoom):

Inequality class 2j

As well as trade unions exerting pressure on employers to pay higher wages, the authors argue that the overall ideological influence of the left on society during the 20th Century helped to mitigate against inequality. Since the 1980s and the rise of Thatcherism, however, the left has lost its way, and as a result there has been less of a brake on inequality:

“It is a mistake to think that the main changes in inequality have resulted simply from impersonal market forces rather than from the outcome of political and ideological processes. Similar political forces are also evident behind the reduction of income inequality in Britain during the two world wars, and in the earliest development of welfare systems under Bismark.”

The paper concludes by arguing that the left needs to “recreate a movement with the political and social influence which enabled the former labour movement to achieve the major reductions in inequality during the middle decades of the 20th Century”, adding that:

“Progress will depend not only on government action, but on wider civic society; trade unions must play a central role in the progressive alliance.”

So in sum, when it comes to reducing inequality trade unions are still the only show in town. The big questions is whether this is a palatable conclusion for Ed Miliband at a time when the press are so keen to paint him as “Red Ed in the pocket of the unions”.

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17 Responses to “The key to reducing inequality? Stronger trade unions”

  1. nodbod

    Yes but they are not the ones currently in government. I am in a quandry with Labour, they should be “my” party but they seem to have lost their way. You are correct; they are effectively Tory Lite and that is not what I want. That said I do believe that there is a case for stronger unions (that was what the blog was about) but even they need to change. In my opinion they need to be far more inclusive and not “trade” based but an organisation to protect across a wider spectrum.

  2. Sparky

    I’ve been meaning to ask you this question for ages. Perhaps you could explain.

    At the last election, there were 45 million people registered to vote in the UK.

    You always accuse anyone on here who disagrees with Left policies of being one of the ‘evil 1%’ who ‘make cash off the poor’ (see above) but your 1% represents just 450,000 voters in the UK.

    But 10,800,000 voted Conservative.

    My question is this: if only evil, 1% types vote Conservative, who were the other 10,350,000 Conservative voters? Common sense would indicate that they must be predominantly commonplace people. There aren’t 10.8M super rich people in the UK.

    So statistically I’m actually far more likely to belong to the remaining 10.3M ‘ordinary’ people who simply don’t believe in socialism as a way to solve problems, than the 450,000 super rich who live in castles, drive Ferraris and drink Krug champagne. Add this to the fact that you have no information about who I am, your position defies all logic.

    I can only assume therefore that this counter-logical view of the world is informed by some subjective emotional interpretation. Or is there some logic behind your position that I’m unaware of?

  3. robertcp

    Free trade unions are actually an important part of the democratic form of capitalism. That is why they are banned under most dictatorships of the left and right.

  4. Leon Wolfeson

    You are conflating “Tory Voter” (which I didn’t said you were), and “rich troll who seemingly rejoices in hurting the British” (which…I am).

    Keep making up false logic to try and deflect criticism though – that’s why I believe you’re a sadist, your deflections and evasions. You are unaware of logic in general, yes.

    That you lash out, slamming everything outside your far-to-the-right-of-the-Tories stance as “socialism”, when I am no kind of socialist (or communist) shows your politically correct views as well.

    I have plenty of information – it’s called your posts. I dare read them, yes.

  5. Sparky

    Let me give you some more data:

    1. I’m not ‘rich’. I don’t even own a car.
    2. I don’t run a business employing workers, poor or otherwise.
    3. I don’t ‘make money from the poor’.
    4. I vote Conservative but I’m not a member of any political party. In the past I’ve voted both Labour and Lib Dem.
    5. I’m a pretty normal kind of guy. I wear jeans and a T-shirt. I go to the pub. I watch the football.

    It’s up to you whether you believe that or not. I imagine that you won’t since it doesn’t fit in with your necessary demonization of anyone who disagrees with your views.

    Let’s face it, you’ve adopted exactly the same tone towards any poster on here who disagrees with your views. It’s not just me. Anyone who has posted a non-left wing point of view here is a “troll” or “evil” or “one of the 1%” or “greedy” or “exploiting the poor” or is “trashing the country”. You seem fundamentally unable to characterize opposition in any other way. It’s like me thinking of all Left wingers as working down mines and up chimneys. It’s simplistic and facile, and doesn’t reflect the real world. I’ll say it again. 10.8M people voted Conservative. We’re all around you.

    I’ll end by saying this: ‘hating’ people because they disagree with your views is a deeply unattractive quality, Mr Wolfeson. You would be far better off channeling that empty, pointless hate into something more inspiring and meaningful in your life. All the best.

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